Growing pains: As Minneapolis pushes for greater housing density, more neighborhoods push back

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The North Loop was long considered especially receptive to development.

Francesco Parisi moved the Minneapolis nine years ago to take a professorship at the University of Minnesota Law School. Six years later, he moved into the city’s North Loop neighborhood because it reminded him of cities in his native Italy.

“I love history and the North Loop was going to give me that feeling of belonging that I was longing for,” Parisi said.

But when he found out, thanks to a petition, that a residential project on Washington Avenue would rise to 10 stories — taller than the existing stock of buildings in the area — and that it had been approved by the neighborhood association, he got active. He ran for a seat on the North Loop Neighborhood Association board.

The developer eventually retreated, and a different project by a different developer is now being planned for the parcel. But the experience led Parisi to believe there was a disconnect between neighbors and the North Loop Neighborhood Association, which — like other neighborhood associations in the city — is given a prominent say in reviewing new developments.

As with other Minneapolis residents who have opposed specific projects, Parisi says he supports the city’s oft-stated goals of increased population and increased density. But, like many others in the city, he thinks the city doesn’t always do a good job of balancing those goals with the interests of those who also want to maintain the character and history of the city’s neighborhoods.

Et tu, North Loop?

The North Loop was long considered especially receptive to development. New residential and commercial projects rarely displaced current tenants. Instead, historic buildings were repurposed and vacant lots were filled.

And redevelopment delivered exactly the amenities that growth and density advocates said it would: more restaurants, more bars, more retail, more people on the street. The result: hardly a month goes by these days that the area isn’t listed on some magazine’s or website’s list of hottest neighborhoods.

But over the last year, three projects in the neighborhood have drawn opposition. Of those, one was approved by the Minneapolis City Council anyway, one has been blocked (for now, at least) and one was withdrawn by the developer. Now, the area — once considered wide open for growth and density — is starting to display the same tensions that have surfaced in the St. Anthony Main area and have been common in Uptown and Linden Hills.

Growth and density win broad support when they are theoretical but attract passionate opposition when they are manifested in specific projects with specific heights, shading, traffic and parking (or lack thereof). “People recognize the benefits in the abstract, but when it’s a block away they’re less happy about it,” said Nick Magrino, Minneapolis Mayor Betsy Hodges’ representative on the Planning Commission.

Francesco Parisi

Council Member Lisa Bender, who chairs the council’s zoning and planning committee and serves as the council’s representative on the planning commission, has led much of the council’s efforts around density. “Most people have chosen to live in this community because of the amenities that come with having the population density that is here today,” she said.

Density in urban areas also fits within the city’s environmental goals, says Bender: it grows population in areas that already have infrastructure, reduces sprawl and allows transit to be more successful. And more households and more people sharing the property tax burden can at least keep annual levy increases lower, she says.

There are social justice reasons as well. The creation of more housing, along with targeted investments in public and subsidized housing, may be the best way to increase affordability and reduce financial displacement.

What’s more, says Bender, every residential project approved eases pressure on a tight housing market. And it isn’t just downtown and near-downtown multi-family towers. Other wards are also being looked to for more density, especially along transit corridors. And single-family neighborhoods have come into play as well, with changes to rules on accessory dwelling units and duplexes as well as reduced multi-family parking requirements for buildings near good transit service. “These are small changes but these all add housing units to our city,” Bender said during a May meeting of the Taxation Committee. “We are making sure that in 10 years we do not become a housing-crisis city like San Francisco or Seattle.”

On the council, Council Member Jacob Frey often finds himself in the crosshairs of the issue. His Ward 3 is where much of the city’s residential development has been occurring. In the downtown part of his ward, there is less pushback from residents. But in other parts of his ward — in places in and around Dinkytown, Northeast and now in the North Loop — each new proposal is drawing vocal opposition.

“Anytime you confront the general, you have to get specific,” Frey said. There are neighborhoods of his ward where historic protections, zoning and comprehensive plans all apply — and sometimes clash. Frey says he tries to listen to concerns but with an underlying philosophy that Minneapolis will be a better place with a larger population and more density. “Picture the cities you love to visit,” Frey said. “The streets are teeming with excitement, there’s diversity of people, the storefronts are thumping. You simply don’t get that level of activity without a population base to support it.”

All of that contributes to a more-dynamic economy, he said. “But let’s be honest,” Frey said. “There’s pushback for everything. Sometimes the only thing people hate more than the status quo is any change at all.”

But Frey said he is pleased that most in the city agree on one thing: “We’ve gotten to the point where support for a surface parking lot is no longer cool.”

Growth as a ‘value’

Growing the city’s population and increasing the number of jobs in the city involves both politics and policy. Mayor Betsy Hodges campaigned in 2013 on her wish to see the city get back over 500,000 in population, something it hadn’t seen since the mid-1950s.

But that’s more than a wish. The Met Council draws up a regional planning guide, currently called Thrive MSP 2040, following each U.S. Census. The plan includes population and employment forecasts for each local jurisdiction. Local plans must be demonstrate how they will absorb forecasted growth.

The last estimate by the council put Minneapolis’ 2015 population at 410,939. Council forecasts estimate it will reach 439,100 by 2030 and 459,200 by 2040. At the same time, the number of households in the city, currently 163,540, is expected to reach 194,000 by 2030 and 204,000 by 2040.

This growth expectation reflects what demographers see as a return of growth to the urban center. “Minneapolis and St. Paul experienced minimal household growth from 1980 to 2010, but have seen significant building since the end of the recent recession,” states the Thrive MSP 2040 report. “From 2010 to 2040, the council is forecasting that these cities will be the top two in the region for household growth, capturing 17 percent of net new households, 10 times their share of the last three decades.”

And Minneapolis is okay with that. “Growth” is one of six values that are to guide city decisions (along with equity, safety, health, vitality and connectedness).

Today, the city is in a bit of a boom, with cranes marking construction sites across downtown and in the near-downtown areas north, west and south. As a result, Magrino says, Minneapolis no longer needs to use incentives like tax increment financing to spur development. But the boom also means it has fewer tools to target development to underdeveloped areas. Rather than build in places such as Bassett Creek Valley or the Southeast Industrial Area, developers “want to build where the amenities already are. They don’t want to take a chance.”

“Which makes sense,” he said. “It’s their money.”

Confusing, even for the well-informed

Minneapolis has a comprehensive plan to guide development (though it’s on the cusp of a major rewrite). It also has underlying zoning plans that are adopted by the city as well as small area plans drafted by neighborhood associations.

Developers often make informal presentations to city staff and council members to begin a process of understanding what is required of them.

The city is required by state law to act on the development applications within 60 days, though a 60-day extension is permitted. A series of notices to the public are required before the project goes before the Planning Commission, which can decide some things on its own, and make reccomendations to council on others.

Projects in historic districts also have to undergo review by the Heritage Preservation Commission, which issues a certificate of appropriateness before such projects can move on to the Planning Commission. It is there that variances from zoning requirements — items such as lot size, heights and parking standards — are granted. The commission can also issue conditional use permits that allow developers to exceed what they can build “by right.” Finally, the commission tries to assure that development is compatible with nearby properties, neighborhood character and adopted city plans.

“Even for a very smart person, it can be confusing,” Magrino said. “You could have a zoning district, then over that the [comprehensive] plan guidelines and then, in a historic district, guidelines for setbacks and height.”

Even before projects reach the heritage and planning commissions, however, the neighborhood association where a project is located will usually have discussed and voted on it, forwarding its recommendations to the commissions and the council. Often, the associations, who the city requires developers to notify, respond to pressure from opponents of projects, who have gone door-to-door organizing other neighbors.

Even so, neighborhood associations have no legal role in these approvals, and developers aren’t required to meet with the neighborhoods or listen to their suggestions. That said, smart developers do work with neighborhood associations to head off potential opposition.

All that process means there are several opportunities for residents to weigh in on a given project. Still, most projects that are subject to public hearings are approved in some form, and many more flow through council via consent agendas with little comment. Even the most controversial plans have supporters, even if they tend not to be as passionate as opponents.

“People are very emotional about where they live,” Bender said, “especially when they own their homes. That’s reasonable. It makes people very risk averse.”

Neighborhood associations: too powerful — or tone deaf?

Kit Richardson is an architect who co-founded the development company Schafer Richardson in 1995. The company has developed both new construction and historic renovation residential projects, mostly in Minneapolis. But he ran into neighborhood opposition over his initial plans to redevelop the block where Nye’s Polonaise Room stood for decades.

Kit Richardson

Even though the neighborhood council approved a plan for a 29-story apartment tower that incorporated the historic buildings at its base, neighbors objected to the height and the shadows it would cast, especially on the historic church next door. Rather than fight for the height he thought was appropriate — and allowed by city guidelines — Richardson’s company changed the design to six stories.

“We lost the support of the politicians,” Richardson recalls.

He is critical of the city’s procedures for project approval, saying it creates the exact things that developers fear: uncertainty and surprise. “It’s rather hit and miss,” Richardson said. “It really depends on the neighborhood associations. They, generally speaking, have a lot of power.”

Before the Great Recession, Richardson worked closely with the Marcy Holmes Association on a project incorporating and surrounding the Pillsbury A Mill. The association ok’d greater heights for the project in return for other amenities, though ultimately the recession killed the plan.

Other associations don’t work as well, Richardson said. And then there are those neighborhoods where opponents come into the process after the association committee has spent many hours considering a development project, a process Richardson summarized as: “We beg to differ. We don’t agree. We don’t go to the meetings. But nonetheless we’re against everything.”

MinnPost photo by Corey Anderson

The former Nye’s Polonaise Room shown in a photo from 2014.

Schafer Richardson

Neighbors objected to the 29-story apartment tower proposed for the Nye’s site.

Elness Swenson Graham Architects

The approved six-story design for the former Nye’s site.

Parisi disagrees with that characterization. He thinks many neighborhood associations don’t do a good enough job of giving residents adequate notice about decisions that are to be made. He said that the meeting on a new proposal for development on a parking lot on North Washington Avenue came with less than 48 hours notice.

How to ease tensions

Barbara Glaser is a Minnesota native who is gradually moving back after spending much of her professional career in Saratoga, New York. She said she and her husband always stayed at the Nicollet Island Inn when visiting, and she chose to live in St. Anthony Main for its history and its walkability. She said she thought the neighborhood was protected by historic guidelines and the city plans that directed high rises to the downtown side of the river.

“I love the scale of it. I love proximity to the river, I love that the old buildings — that the Nye’s buildings — are being incorporated into new so we can keep some of the character of the old even while building new density,” she said. “But I also love the story. It’s a great story.”

Barbara Glaser

And while she lives in one of the neighborhood’s ’80s-era towers, she said she doesn’t think the buildings from that era should set the precedent for heights in the area, and she was among those who opposed construction of a high-rise condo building where a historic commercial club-turned-funeral-home now stands.

But the city council overruled attempts by the Heritage Commission to push the developer Alatus harder to find a use for the funeral home. And the council upheld variances that let the building rise to 40 stories, despite guidelines that would have capped it at eight. Though others in the neighborhood support the project, there remains potential for a court appeal of the council’s decision.

Glaser said she now fears that the height of the building will be a precedent, not just in the area of Marcy Holmes near St. Anthony Main and Nicollet Island, but into Dinkytown, where a mid-rise tower is being proposed by a different developer.

“My interest is beyond this single buildings,” Glaser said. “We are enjoying a huge amount of rapid growth and in this one period of time a lot of similar style of architecture. I don’t mind height, and I don’t mind infill, and I don’t mind contemporary. But what draws people here is the unique character of our neighborhoods, of our story.”

Bender said that the neighborhood review process is complex, and when it’s done poorly it adds to the tension between neighbors and developers. But when it’s done well, it eases it. “Our process doesn’t work well for anyone, including neighborhood organizations,” Bender said.

The city doesn’t provide them the help and resources they need “to facilitate these very heated emotional discussions.” Some neighborhood councils have the wherewithal to pay for consultants or have expertise on their boards. Others don’t.

“Time and time again people come in (to neighborhood associations) and say ‘I just don’t want them to break the rules,’” Bender said. “I totally understand that. I understand that they have a lot of distrust for developers … It causes people a lot of stress. So if we’re gonna rely on neighborhood associations, it would be better to have a consistent process and train board members.”

Well functioning boards are more trusted by neighbors, Bender said. They can say “this project is going to be built but we’ve asked for these seven things and we’re getting six.”

Economics of height

A city that desires more density often gets it via taller buildings. But building height is one of the flash points for projects. Opponents argue that taller buildings should be in the downtown and new buildings in near-downtown neighborhoods should be similar in height to what is already there.

The city and its current elected officials seem to be favoring more height, as the Alatus approval demonstrates. Building taller requires concrete, steel and more money. But taller also provides more saleable or rentable square footage. Developers who are able to build taller are often willing to provide more amenities such as open space, street-level retail or better design. “If you want a higher-quality build, you have to go higher,” Frey said. “Not always, but often.”

Added Bender: “If you require a lot of parking or you require every building to be brick or you require all buildings to only be four stories, that means everything is going to be way more expensive,” Bender said. “Yet the overall narrative is that housing prices are way too high and the council isn’t doing enough. As policymakers, we have to step up and find that balance.”

The population of Minneapolis was stagnant from 1970 to 2010, but now has added over 30,000 residents in the last six years. That puts us in a housing shortage: those people need places to live! If we don’t build more housing, those new residents often displace people in existing houses and apartments. The effects of this were documented in a previous MinnPost article, which mentioned how older buildings are being renovated and brought back on the market with higher rents. That’s exactly what happens when not enough housing is built: affordable housing goes away.

If we don’t build new housing, prices will continue to skyrocket. Lisa Bender’s quote about Minneapolis not becoming the next San Francisco or Seattle rings especially true. Those cities did not build enough housing to accommodate their growing populations and now are in positions where drastic measures are needed to keep housing costs low. That’s not something we want to emulate.

Much of the local opposition to projects seems to come from those who are not feeling the upward pressure of the housing market. If you’re locked into a fixed mortgage at this point, it’s hard to empathize with renters whose rents increase year after year. I’m glad the city council is pushing for more housing, especially in areas that have excellent transit access. More housing creates more choice, and that’s a win-win for all residents of the city.

I live in the Historical District and moved here for the character and sense of community. Tall buildings over 30 stories (Alatus 42!) do not add character. Nor do they add to a sense of community and street life. Again, look by the Carlyle. Where is the sense of community there? Where is the street life? It will only come when the lower surrounding buildings are added. Those living outside the towers will not be able to see the sun or sky for a good part of the day. If we must have towers, we will need a commitment to additional open spaces to accommodate and compensate. Poor little Chute Park won’t be able to handle the density. The proponents often refer to NYC as an example of density via building heights. But there as well, people are fighting the high rises for the same reasons we are here-congestion, lack of sunlight, blocked views, lost character. Frey argues that the high rises will cut down on traffic. That hasn’t been my experience living below and in the shadows of these behemoths.

It is absolutely insane to object to height in the abstract, as though something that’s almost always outside of your line of view makes a meaningful difference to your experience in a neighborhood.

If the height means excessive shading, that could be an issue (although rare). If it means dwarfing of something important, that could be an issue (also rare). But that’s about it.

But if your complaint is that it will block your view, well, sorry, but you don’t have any right to your view and we don’t have to make the rest of the city poorer and more expensive to live in to protect it.

And then there’s the hypocrisy of living in an ’80s era highrise while arguing against new ones…

And we’re in the middle of experiencing that rapid growth again. Except unlike in prior years when Minneapolis was growing, we have such restrictive zoning across much of the city that it’s impossible to build small-scale development (i.e. triplexes and fourplexes). This is especially true in areas that are well-served by transit, such as Lowry Hill East. Since small-scale development is no longer permitted (in fact, the Lowry Hill East Neighborhood Association was founded specifically to stop walk-up apartments from being built), we end up with a few massive buildings, like the 42-story Alatus Tower, rather than more small-scale ones.

Personally, I prefer a healthy variety of housing (single-family homes, fourplexes, and 20-unit brownstone buildings) in my neighborhood, but that doesn’t seem to be what neighborhood associations in desirable areas want. So instead, we get uglier density: huge luxury buildings that are almost universally despised as not possessing the proper “neighborhood character” (whatever that means). After all, our ancestors didn’t move to Minneapolis’ apartments because of dog-washing stations and fitness centers, so neither should anyone else.

Part of the problem here, which the article doesn’t mention at all, is the city’s repeated failure to follow its own guidelines and comprehensive plan when some developer comes to them with a project that breaks fifteen or thirty rules for the area.

We’re not talking abstractions (Lisa Bender’s goals of density, density, density is an abstraction that blows down all objections based on realities and rules that establish and enhance a sense of specific place). We’re talking well-studied and carefully considered building guidelines, including height but also massing and materials, etc. A historic district–in this case, the old St. Anthony (original Minneapolis)–was established because of the miraculous survival, on the East Side of the Mississippi River in Minneapolis, of much of the original town. The town that was built up once, and still stood there, which cannot be said for most of downtown except for the warehouses–downtown has been built and rebuilt four to ten times on any given lot. Should we save that? Minneapolis said yes.

But then the Planning Commission, again and again, gives variances and permits conditional uses so developers can do what they find double-digit profitable, and historic districts be damned. It boggles the mind to see how our existing standards on height are broken, our existing rules on setbacks are ignored, etc. It’s not residents’ fault when they complain that documents are not paid attention to.

Neighborhood associations are held to high standards of notification these days, after the city took away most of the NRP money neighborhoods might have to actually plan and implement public hearings and notifications about developments. And, I just learned that our Planning Department has been dwithout a Dirctor for a while, and has for some reason a much-reduced staff. Why’s that? Professional planning staff is essential to controlling the greed of some developers.

But I think you’re right that much of the frustration around these things comes from people seeing deviation from guidelines as somehow unfair. There’s nothing nefarious about using the available procedures to deviate from guidelines.

Recently, about a mile from my home on the East Side of Saint Paul a senior apartment building opened. It’s three stories, but the developer had wanted five. So that makes 20 to 30 seniors who will not be able to sell their homes to young families and still stay in the neighborhood they’ve called home, often for decades.

Those older folks coached teams, bought candy for schools fundraisers, patronized the dry cleaners and other stores for years. Many served our country in the armed forces. They chose to raise their families here, and many want to stay here.

I am all for saving historic districts, but there are very few things worth saving in the Twin Cities. Our cities are too new and urban renewal has destroyed too much. NIMBYs make it harder for other people to live and contribute to the city. If they keep this up Minneapolis will only be for the rich like the coastal cities.

I suggest she look more deeply at the data to reacquaint herself with the major issues of a lack of affordable housing for low to middle income folks. Endless approval of high end housing does nothing to alleviate the shortage for the majority.

The alternative to building new units is renovating old ones. The buildings that end up being renovated are often those that are currently affordable. The landlord kicks out the old tenants, updates the units, and puts them back on the market for several hundred dollars more per month. That’s how we lose affordable housing, and this is already taking place in the city (largely in places like uptown and Whittier).

Since we can’t prevent landlords from updating their buildings, building more units fills the market demand for high-end units. Existing landlords love it when people fight against development during a housing shortage, because it leaves them in a better position to raise rents.

Look, in 1950 the population of MPLS was 522k, that’s 70k more than everyone is dreaming the population can be in 2040. In 1960 when the freeways were under construction the population was 483k. Where were the 30-50 story high rises then? The city actually had way more land devoted to factories and commercial property than it does now, and while some housing was demolished along Hiawatha, and skid row in the 60s for the most part that housing stock, while old, is still there.

Factories, grain elevators, warehouses (the Old Sears building for instance) have been replaced or converted into housing all over the city and that’s all additional housing that didn’t exist in the 1950s.

When people say the only way to get another 50k people into the city (which is I remind you is 30k- 70k less than were there in the 1950s and 60s) is to build high, it just doesn’t add up.

So if the cities population was denser before without the high rises why can it not be denser now without the high rises? Square millage isn’t the issue, there’s more space now than there was then, it was call the “warehouse” district for a reason, AND the street car barns, and junk yards, etc. were all in that area.

So what it always comes down isn’t actual living space but profit for developers. Developers want to go high because that’s how they make more money. Sure the larger the structure the more it costs to build but the margins are huge. There isn’t a $500k Mcmansion in the country that cost more than a $150k to build. Once the foundation is laid adding floors is relatively inexpensive and the more units you can rent or sell the more you make. One thing that is never ever discussed in any article about all this housing and building is the actual costs of building compared to the prices being charged to buy or rent the completed space. Why is that? Why don’t reporters EVER ask for that information?

In our first house, in the Kingfield neighborhood of Minneapolis, which we moved out of when child #3 was on the way because we wanted more space, our neighbors remembered a prior family raising 5 or 6 kids in that house. That city block we lived on had, in the 1960s, about 100 children – that’s an average of about 5 per house. compare that today where firstly families are generally smaller, and secondly, people have expanded what they are looking for in a house. It’s no longer considered character building to share 1 bathroom with 6 family members. The acres added or removed to the housing stock isn’t so much the issue as it is that you now have houses that in the 50s and 60s had 6-8 occupants now have 2 or 3.

I think you’re underestimating exactly how much land we’ve turned over to freeways since the 1950s. It’s actually pretty massive (but then we also took a lot from railroads).

But regardless, we don’t have a bunch of vacant housing stock, which means a growing population requires more.

As Anton said above, thanks to our zoning it’s quite difficult to build smaller infill projects (tri and quad plexes and smaller walk up apartments) that were a very large part of the puzzle for our larger past population.

But even if we were building a ton of smaller infill, there’s no inherent reason why towers can be part of the equation too.

If we don’t really need high rises to accommodate the density it’s perfectly rational and appropriate to discuss the aesthetics of dropping a 15-40 story building in the middle of a neighborhood full of two or three story houses, or 4-10 story apartments.

There are many cities in the world that cap height for aesthetic reasons, Paris, London, Boston, Washington DC etc. If you’ve been to these cities and neighborhoods and compare them to cities and neighborhoods where developers were simply given free reign, the contrasting aesthetic quality and street level experience is striking. I can imagine walking around Boston’s Back Bay or Paris’s Louvre neighborhood and encountering some of these cookie cutter metal clad high rises they build today, but the thought is a horrible experience that makes me shudder.

One thing it is to drop these things into old industrial corridors like the Greenway, Hiawatha Ave, or even the old warehouse district. But Uptown, St. Anthony Main, or even Dinky Town? This needs to be considered and it doesn’t look like city planners and developers can be trusted to make the best decisions.

As I mentioned in a comment above, it is nearly as difficult to build small-scale developments as it is to build high rises. Almost all multi-family proposals in desirable areas are vocally opposed by neighbors. Linden Hills residents fought against a 29-unit development for years. In uptown, neighbors fought tooth-and-nail to stop a new 10-unit building near Franklin and Hennepin and a 40-unit building on 24th and Colfax. There was another near 36th and Grand, and on 26th and Stevens. These buildings are all 4-5 stories and faced just as much opposition as the 42-story Alatus Tower.

So if I were a developer, I’d probably think “well, these people are going to hate my project no matter what, so I’ll build it as large as I can.” Personally, I’m not a fan of that attitude and prefer the smaller-scale development, but even things like new triplexes and fourplexes are not currently permitted under zoning that applies to much of the city. If we want more small-scale development, rather than more high-rise towers, we need to upzone desirable areas of the city from R1 (one residential unit per lot) to something like R3 or R4 at least.

Areas like Uptown and St Anthony Main have excellent transit access, due to geography and proximity to downtown. That’s exactly where we *should* be building.

Expectations continue to change, people are returning to smaller footprints for a variety of reasons and that’s what “urban” living is all about. I don’t think people expect to move to MPLS and live in a big suburban house on a big lot. The new units themselves don’t look a that much bigger than the older ones. Even in the suburbs like here in St. Louis Park they’re building small “Flats” that sell out before the roofs on.

I’m not saying it’s easy to build, but there’s a ton of building going on so it can’t be THAT difficult. The problem with building in Uptown is there’s already buildings there, so yeah if you want to tear stuff down go build bigger stuff for people who more space? Besides, they’ve been building in Uptown all along the Greenway.

Most of what was lost to the highway’s was residential single family homes, and by the mid 60s that demolition was largely complete. I do’t think 70k people lost their homes to the freeways.

Housing shortage? Listen, after WWII they put up surplus quonset huts all over the metro area because returning soldiers and their families really really could not find housing. THAT was a housing shortage. I think the past couple decades when people talk about shortages their talking about markets, not actual space for people to live in.

If you seriously think we need to see more quonset huts before we should start building actual housing, I don’t even know what to say. Despite whatever your personal experience is, real people are affected by our current housing shortage. It shouldn’t take an increase in the homeless population to make our city leaders understand that.

Also, unlike after WWII, I’m going to guess that quonset huts are prohibited under our current zoning code. You’re probably going to need a couple of variances and conditional use permits for those. Fortunately, I read from these comments that the city loves all new development projects so that shouldn’t be a problem.

There’s a difference between “real” housing shortages and marketing strategies cooked up by realtors and developers. There’s a huge difference between literally not being able to find housing, and having trouble finding different housing in different location because you want to move.

A shortage of housing for future populations who haven’t arrived yet isn’t a real shortage. A shortage of housing for people who want to move out of their existing housing, from one location to another isn’t a real shortage.

Realtors and developers are always talking about some kind of “shortage”, new homes, existing homes, whatever. That’s how they created the housing bubble in the first place. When they wanted to make money selling sprawl they were all about the shortage of suburban housing for people who wanted to get out of the city. Now they want to make money selling housing in the city and they’re all about the shortage of urban housing for people who want to move back to the city. These aren’t “real” shortages they’re marketing strategies designed to keep people moving because if they don’t move, they don’t buy or rent housing.

When you combine this marketing strategy with urban chauvinism you get this mumbo jumbo about “density” and it’s a perfect storm of teapots pretending to great big kettles.

I’m not disputing the vacancy rates, home prices, or growing population. I’m just questioning this narrative that some kind of crises or potential crises for developers or the city of MPLS is emerging.

All of these number fluctuate for a variety of reasons and those making the complaints have a variety of possible motives for exaggerating problems. Complaints by developers for instance typically lead to the relaxing of restrictions by sympathetic or alarmed city officials who worry that development will move elsewhere. When you see new construction ALL OVER the city but developers are complaining they can’t get anything authorized you know something funky is going on. Most likely the problem isn’t that the can’t build, they just can’t build anything they want to build wherever they want to build it.

Housing prices rise and fall for a variety of reasons. There was no housing shortage that drove up prices during the housing bubble for instance, investors were buying properties hoping to flip them. Housing prices tend to go up unless you’re in a depressed market of some kind, therefore rising housing prices don’t necessarily indicate a shortage.

Low rental vacancy is just that, unless vacancy rates are zero and people moving into the area can’t find vacancies you don’t have a “shortage”, you have balance between supply and demand.

Sure the cities population is growing, but it’s not outgrowing the available housing at this point and more housing is coming online, and projections are just that, MPLS can hope for population of 500k but it’s just as likely the suburbs will pick up that population. Vacancy rates downtown are higher than those in the suburbs.

Again, housing prices fluctuate constantly for a variety of reasons, it’s not simple supply and demand. For instance the highest rents in the city are currently paid in the downtown area… where the most housing has been built since the recession, and they have the highest vacancy rates (5%-7% compared to 2%-3% elsewhere). So you have an area that built (technically over-built) more to meet the “demand” than any other area of the city, yet that hasn’t kept rent lower there. Obviously pricing is a more complex matter than simply supply and demand.

So no, rising prices are not necessarily “strong” evidence of a shortage and they certainly don’t point to a “crises” of any kind. Sure if the population grows you need to build housing, but we’re doing that, MPLS added something like 20,000 housing units city wide since the recession.

Developers and realtors always want housing prices higher than they are because they make more money that way. One way or another that industry is always trying to drive prices up, I’m not accusing anyone of anything I’m just saying that’s how actors in “markets” work and we need to bear that in mind if we try to have a discussion like this.

I take you to mean that you think the changes in supply and demand that move prices are somehow artificial. I mean, maybe, but generally no. Obviously, interest rates play a role as house purchases are almost always financed, but no, realtors and developers don’t really have the ability to manipulate the market and I don’t know why you’d think they do.

For an anecdote, my brother and his wife bought a house in South Minneapolis this summer. It took them months of looking and making offers on multiple houses that sold well above asking. We watched as houses sold the first weekend or even before they had an open house (went to more than one open house for houses that sold within a day or two of listing). That’s pretty obviously because there are/were more people interested in buying houses than houses available.

Granted, houses in South Minneapolis are inherently constrained in supply as we’re talking about neighborhoods that were fully developed decades ago, but you can also see the demand when smaller older houses are being torn down to be replaced with larger ones.

For that matter, we sold our downtown condo in 72 hours, also for well over asking, and he and his wife sold there’s darn quick too.

Or you can see it in rapidly rising rents across the city.

Downtown rents are higher because a lot of them are “luxury” units that come with a lot of amenities, and the convenience of downtown living. The vacancy rate is higher almost certainly because a lot of those units just came on the market (4Marq, Nic, Lat45, LPM). They aren’t going to stay low as those new building fill up.

Developer have no magic powers. If they prices are higher than the market will bear, units will be empty. Rents are going up and units are largely full. That’s supply and demand.

Supply and demand is a simplistic market theory that rarely actually explains prices in a realistic way. Construction costs, age, conditions, locations, cultural trends, median income levels, lending practices, crime rates, etc. etc. all contribute to housing prices. This is why other metro areas are seeing much more rapid housing price inflation than we are despite slower or lower population growth. Look, during the height of the housing bubble building was booming at historic levels and far outpacing demand… did that keep prices down? No, prices were at historic highs. Obviously there are other factors involved.

I’m not proposing a radical new theory here, this is pretty basic economics.

There’s a difference between a hot housing market, it’s called a sellers market, which we have in some locations, and a housing crises, which we don’t.

During the housing boom, construction was not keeping pace with increased demand. That’s it.
Building a lot does not imply building more units than there was, at the time, demand for. Now, much of that demand was driven in by what were then historically low interest rates, and some of it was speculation and/or buying for investment. Credit conditions changed and much of that demand then went away, but that doesn’t make it any more than a supply and demand story.

But that’s the past. What is your theory, today, for why houses and condos are selling super fast and above asking prices? We’ve got super low interest rates, so that could be it, but I don’t get the sense that we’re seeing a general housing boom (housing construction, for example, isn’t particularly strong), rather than localized demand for scarce houses.

What’s your story for low vacancy rates city-wide (even the “higher” downtown rates you mention are pretty low)? Are people renting empty apartments as an “investment?”

You’ve suggested that developers and realtors are doing something to create local tight housing market conditions. What? And do you think the fact that we didn’t building anything from around 2008 to maybe 2012 or so has anything to do with it?

I’ve read all of your comments, but you skip over the important bits. I read you as saying you’re skeptical that there’s a need for more housing in the city, because developers make money off of building housing in the city. That’s a non-sequitur. You say that rising rents and housing prices don’t reflect supply and demand conditions, but you’ve done nothing but point out that more expensive units are more expensive. That does nothing to explain why rents for existing units are rising.

God save us from people who believe in one principle and think that makes them economists. We didn’t end up with millions of vacant and abandoned properties all over the country because we weren’t overbuilding, I’m sorry Adam but your explanation for the housing bubble is simply mistaken.

Maybe your’re reading, but you are not comprehending my comments. You’re debate gaming. I’ve never denied that there is a need for new housing. And I’m not denying that population isn’t increasing. I just suspect the “need” is being exaggerated for profit, and I don’t think the conflict between neighborhoods and developers is being driven by a population boom of any kind. The narrative that developers know what to build and people who live next to those developments are ignorant obstructionists is simply a bogus narrative.

This isn’t a “growing” pain its the age old conflict between developers who always want to make as much money as possible by building big, and residents who don’t want to live next to monstrosities for a variety of reasons.

There are a lot of other complexities that I haven’t bother to bring into the discussion, such as a why anyone would expect the majority of the population increase to land in MPLS, and why those newcomers would need 1,500 sq ft of apartment space. But clearly, we have enough on our plate just trying to discuss what we have here.

I don’t know, I just have trouble feeling too sorry for developers. How many times have we see developers come in with big plans only to see them fall apart because they couldn’t get the project together. It’s not always neighbors that kill developments.

Developers kill the Uptown mall for instance. That a was vibrant retail space without a single vacancy until some developers bought the place and launched some hair brained scheme to build condos on top and yadda yadda big big plans. They killed a successful property in it’s prime. Name your example, we’ve all seen it. Look at the Suburban World across the street, someone who I won’t name bought it thinking they’d build a kitchen in there and turn it into some kind of dinner theater and they killed it. We lost one of the most charming neighborhood theaters in the city.

We need development, I’m not saying it’s bad, but we have to careful and you can’t just trust developers.

Another disappointing piece of obvious propaganda by Mr. Callahan, showcasing the positions of current Council Members who will face re-election next year. A couple of token Minneapolis residents were interviewed, yet numerous pro-development pro-businesspeople were allowed to spout their philosophies (and justify their bias against neighborhood associations), such as Magrino (“It’s their [developers’] money.”), Bender (“As policymakers, we have to step up and find that balance.”), Frey (“Minneapolis will be a better place with a larger population and more density.”), and Richardson (“It really depends on the neighborhood associations. They, generally speaking, have a lot of power.”)

In truth, neighborhood associations have NO power in the process and their role in shaping the future of the City has been effectively eliminated by the current “tone-deaf” City Council members who flaunt their power and ignore constituents.

And pahleez: “There are social justice reasons [for density] as well. The creation of more housing, along with targeted investments in public and subsidized housing, may be the best way to increase affordability and reduce financial displacement.” All the while, these CMs’ seemingly progressive policies are actually reducing affordable housing and destroying the neighborhoods that lose their character and scale so that developers can profit, with the full support of the City Planning Commission and City Council, ostensibly for “density” that many neighborhoods already have.

Most residents do not oppose density–but are dismayed that CPED and CPC are encouraged by an autocratic City Council to approve projects that reduce affordable housing and destroy the character and scale of neighborhoods while enriching developers.

You see articles like this every so often, and my problem is the focus frequently seems to be slightly askew.

For instance this article describes conflicts between neighborhoods and developers as a product of growing population, i.e. “growing pains”. In reality these are the same conflicts that always come into play regardless of population growth, so “growth” can’t be the driving factor here whether that growth is real or not.

This is why I’ve been writing about whether or not the shortage is “real” or not.

Whenever developers build anything anywhere they always claim to be meeting some kind of “demand” which implicitly means they argue there’s some kind of “shortage” for whatever it is they want to build, be it shopping centers, office buildings, or housing. Those rationales aren’t reliable, sometimes we get stuff we needed, other times we get white elephants. The real estate industry is closely tied to development so you can’t always realtor rationales either.

I’m not trying to demonize developers or realtors, seriously I’m not. I’m just pointing out the fact that like actors in any other market, they will pursue their own best interests, not necessarily the community or neighborhood’s best interest. So we have to be careful about using their rationale’s to make public policy decisions.

I read articles like this and I frequently find myself asking myself: “What’s this really about?” But maybe that’s just me.

So far, you’ve inundated this comment section with 9 of the 32 comments on this article. We get it: you don’t see a housing crisis and you don’t think we should build until the vacancy rate is at zero. Those whose rents are rising would rather not wait that long. My rent rose $200/mo so I moved out of the neighborhood I lived in for 15 years. I would’ve rather seen new development in my neighborhood so new residents could live there alongside me.

I don’t consider the 9 comments inundation, but rather commitment to clarifying and exploring the issue, and I appreciate the information and perspective. The market has more than enough luxury housing. Most new development of housing in Minneapolis is for luxury apartments or condominiums, driving out people who cannot afford the cost and are just looking for decent housing at a reasonable price.

That’s the problem. People who are willing to pay for luxury housing will rent non-luxury housing in an appealing neighborhood. That’s a big driver of rents, and a big incentive for landlords of non-luxury properties to upgrade and get more for their units.

And almost none of our new development are replacing existing units (the tower mentioned in the article above, for example, replaces exactly zero units).

We definitely also need more “market rate” and affordable units too. But we don’t get them by not letting people build luxury units.

Not building is what drives people who cannot afford luxury units out of the neighborhood.

New developments do not cause existing housing costs to rise. People want to live in desirable areas: walkable areas with low crime, and where there is access to transit and other amenities. I was willing to live in a tiny mediocre apartment to live in a neighborhood that offered these things. But when other people (who are wealthier than I am) are willing to make that same trade-off, I can’t afford to stay. I’m sure the attorney who moved into my unit would’ve paid even more to live in that area in a nicer place, but there wasn’t anything available. That’s what happens when you stop new development in desirable areas (and anywhere). You can fight against displacement, or you can fight against developers and the housing they create, but fighting both is near-impossible.

Besides, luxury units will not be luxury forever. Unless it’s subsidized, new development is almost always aimed at the top 20% or so of incomes. Over time, that percentage goes down.

New units today, luxury or not, are units that people can afford to live in in the future. Between 1975 and 2010, we didn’t build much of anything, as our population was stagnant. Now that we’ve added between 30,000 and 40,000 residents in the last 6 years, we’re really feeling the effects of no new “naturally occurring affordable housing” coming online. If we build now, future generations will not feel the same housing shortage we’re feeling today. (Obviously you’ve stated you don’t believe there is a housing shortage, or that developers are somehow creating it, so I doubt that argument will convince you anyway.)

Shinny new housing doesn’t raise property values. And rising property values don’t increase rents. There’s no such thing as “naturally occurring construction. People build housing, it doesn’t spring out of the ground on its own.

Generally, adding housing to a neighborhood, whether shiny or not, does do much one way or the other for existing properties. Typically, no one would pay more or less for your house because your neighbor’s house is fancy. Much more likely, the fact that someone wants to build shiny new housing indicates that there’s already strong demand in the area and your property value is going up regardless. The question is whether it goes up with adding housing capacity or not, with the latter leading to faster increases (this is the San Francisco story).

And, of course, one of the traditional justifications for zoning codes (you can find it repeated ad nauseum in the case law) is that adding the wrong type of housing (i.e. apartments) harms the value of single family homes. That’s probably dubious, but it’s common and the exact opposite of your argument.

I suppose if a new building adds amenities (e.g. a fancy grocery store or something) that weren’t previously present that could increase the appeal of the neighborhood overall and lead to rising values for existing units. And I suppose if new housing adds a critical mass of new residents that could make it easier to add amenities (e.g., transit) and have the same result. I’m not sure we want to discourage those things, however.

is that rents in the older apartment building rises dramatically due to the increase in the new high density apartment buildings. For instance, in the neighborhood where I live, The Wedge, the increase in the newest vacancy has been $115 for a new occupant in this small apartment complex. Going back a few years ago, say 3 years, the increase as been $215 once people move out. So far my increase has been $100 in those same years but it will continue to go up. Amenities? A fridge, oven range, bathroom, AC, leaking laundry room, leaking storage, ceiling fan ($29.95), carpet, lack of parking space….well, let’s just say amenities aren’t the driving force behind the rental increases, it’s the many high density apartment complexes appearing in Uptown and along the Greenway. I can’t see any reason to stay in this community where I’ve lived for decades, at least my pocket book doesn’t. I like it here, my pocket book doesn’t, and it rules. Something like this creates high turnover rates…or people have to double up in single occupancy apartments. That does increase density, but single people living together will not create stability in those areas since most singles won’t stay together very long. So then, it would seem that as people move into the cities the density of the suburbs should drop off. So should rental prices…or remain stable. That won’t be the case, at least at first. I live on Soc. Sec. and it’s not adjusted for rental increases nor is there rental relief for the majority of us who can’t afford sudden high spikes in rental costs. All prices, cost of groceries, etc, in the Uptown and The Wedge community will change and they won’t get cheaper due to density increases. When someone moves out where I live the apartment will get new carpeting, new kitchen sink and cabinets and a price hike. The new amenities!

Jon, this is pretty much story everywhere people like yourself have this experience. And you can see that prices aren’t being driven up by a population surge per se; your rent isn’t going up because more people live in your neighborhood now than did 5-10 years ago, it’s more complicated than that. If those were public hosing developments for instance, your rent might actually go down despite more neighbors in that scenario.

And while one could say that we’re adding more high density housing to the region, we can’t say we’re increasing density in your neighborhood, especially if that new housing contains larger apartments and or fewer occupants per apartment and square feet.

So is this about “growing pains” or is it more complicated that? I say it’s a lot more complicated. One thing is for sure, the folks who make money, landlords, developers, realtors, local restaurants and retail, etc. are making MORE money, while the people who live there are being priced out, and that’s the trend developers and city planners actually try to promote that trend regardless of population. This is just another form of gentrification and gentrification is rarely linked to population growth per se.

So you can see how some cities have ended up with rent controls and public housing projects as a means of keeping housing affordable rather than hoping the “markets” will take care of it somehow.

but here in the metro area rent controls have decreased significantly over the years. From what I’ve heard, most of the new complexes along the greenway have yet to rent out a majority of their apartments. The apartments tend to be smaller but more expensive than the surrounding areas, which includes the wedge, so there’s a ‘green’ envy among the smaller indigenous apartment building owners. And most of those are controlled by property LLC’s, managing housing for groupings of separate Landlords. Senior housing is basically divided into two groups. The expensive kind, the majority are in the suburbs, and the kind that is also known as ‘section 8’ housing where one doesn’t simply apply for an apartment of their choosing but rather one applies for a place in line for whatever happens to be open at the time. I also agree that gentrification is part of the equation in higher rents, or in other words drawing wealth into the area, but these older apartments don’t have the type of amenities that’ll hold onto tenants long, meaning higher turnovers for them. Before the sudden increases here most people settled in for years with comfortable rents, as the rents have gone up turnover has increased dramatically. And curiously so has the rent as the apartments come open. It would seem that those complexes are seeing a net loss as they increase those rents. And so they raise the rent again to try cover the loss. It appears to be a net downward spiral.